Rise in pay floor puts care homes under pressure

The national minimum wage increase has made it much harder to recruit and
retain employeesin care homes.

A survey of 1,500 care home operators reveals that the majority are being
underfunded as local authorities have failed to budget for the increased rate.

Over 93 per cent of respondents in the survey by the Federation of Small
Businesses, state the rise from £3.70 to £4.10 on 1 October 2001, was not
reflected in the prices paid by local authorities to residential customers.

More than 15 per cent of care home owners said they are now in trouble or
facing closure because of the change.

Clare Smith, director of HR at Leonard Cheshire, agrees it will create
problems for the sector.

"The minimum wage increased by 10 per cent, while local authority fee
increases were around 2 per cent. In an already under-funded sector, the gap
will cause many service providers – especially charities – serious
difficulties," she said.

Smith said care home provider Leonard Cheshire will not be closing homes or
reducing other services because of the rise in the minimum wage, but there will
be less money available to spend on the 19,000 disabled people the charity
provides services for.